Why Vodafone wants Cobra - to accelerate into connected-car market

A few days ago, Vodafone announced its intention to buy Cobra — an Italian provider of security and telematics systems, listed on the Milan stock exchange — at an overall valuation of €145m.

The aim of the acquisition — as Erik Brenneis, director of M2M at Vodafone, explained — is to "create a new global provider of connected car services", adding a more comprehensive range of services to Vodafone's offering to automotive customers.

Vodafone is already trying to establish itself as a key player in this space. It has recently announced a new agreement with Volkswagen and Audi in Europe to provide automotive connectivity, starting with new Audi models from 2015 and an embedded SIM chip developed specifically for the automobile industry will feature in new vehicles.

But to really make a difference, it will need much more than that, and that's where the acquisition of the Italian company comes in. Connectivity has become a commodity and it's less valuable than it once was — what matters now are all the services you can build on top of this connectivity.

On a basic level, this means using internet access for entertainment — such as streaming music, and playing audio books — or as a navigation aid. But web connectivity can also open more complex opportunities ranging from stolen vehicle tracking to location based recovery services, from pay-as-you-drive to driver behaviour based insurance policies — all areas in which Cobra is a market leader at the European level.

An exclusive agreement with Porsche allows the company to offer assistance to customers involved in a car crash or who have their vehicle stolen, in 41 countries. The deal sees Cobra take care of all the bureaucracy, from contacts with the local police to the insurance provider. Other deals with manufacturers active in the luxury car segment — from Ferrari and Lamborghini to Maserati and Bentley — are also in place. The real asset, however, is the enormous amount of data collected and the capability to make sense of it.

All information coming from the car, from location and speed, preferred routes to how often the driver brakes is recorded in a 'black box' and sent via GSM, GPRS, or 3G to Cobra's servers, and this data is then analysed to assist the customers during an emergency — or to provide insurance companies with all the details needed to offer a personalised rate, tailored on the driving habits of the single customer.

The more data you have the more you become good at analysing it, as you are able to spot historical trends.

Vodafone hasn't provided much details about its plans for Cobra (the company did not respond to a request for comment), but its resources will no doubt be a key driver to sustain the Italian firm's international growth; while in Europe the brand is quite strong, in other markets it has still to develop a significant presence.

In China and Japan, for instance, Cobra is present only as a manufacturer, producing and selling alarm systems and other electronics for cars, such as parking sensors. In South America, the only Cobra subsidiary is headquartered in Brazil, while in the US operations have begun only recently.